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Learn all of the basics of freight, from modes to key players, important documents to how to request a quote.
Since there have been boats, there has been trade. From the early days of single logs that were floated down rivers with cargo attached to today’s massive container ships carrying billions of tons of volume over the water every year.
Today, freight moves across many different modes: on ships, planes, trucks, and trains. However, 90% of the world’s goods in 2021 are transported the same way they were 5,000 years ago, on a ship. International freight today, however, is a little more complicated than simply strapping some goods to a log and sending it downstream.
Despite the complexity of international shipping, it is not impossible to understand and to eventually excel as a shipper. This guide should give you a good overview of the basics.
Freight V Parcel:
Before we dive too deep into the mechanics of freight, let’s first make a key distinction between freight and parcels. Parcels refers to the small, lightweight, and usually individual shipments handled by common carriers like USPS, UPS, and FedEx. Parcel service has a completely different pricing structure than freight shipments as well as a different booking and arranging process. You would generally use parcel service for a shipment under 150 lbs and below 165’’ in length plus girth. To arrange a parcel shipment, you can usually drop off your shipment at one of the above carriers’ numerous locations and you would pay according to dimensional weight or actual weight. Freight, on the other hand, refers to shipments that usually contain multiple items that together exceed 150 lbs.
Modes: Air, Ocean, Truck, and Rail
There are four main forms of freight transportation: air, ocean, truck, and rail. Each serves different purposes throughout the supply chain and it is important to be knowledgeable of their different strengths and weaknesses to make an informed decision about which mode (or modes) to use.
Air freight refers to freight that is transported via plane, either a cargo plane or in a cargo hold of a commercial flight. When you choose to transport your goods via air freight, they will be transported from your supplier to the origin airport and then flown to the destination airport where your goods will be trucked to their final destination.
Air freight is the most expensive option (more on freight costs below), however the value of air freight is in its speed. By far the fastest method, shipping your goods via air can result in your shipment arriving as quickly as 5 days, as opposed to ocean freight, which can take up to 45 days.
Air freight is also usually safer, as cargo is handled less and there are fewer environmental dangers to transportation via air than ocean. However, some hazardous substances, such as many batteries and certain electronic devices cannot be moved via air freight.
Ocean freight, as the name suggests, is transported via ocean in a shipping container. Ocean freight moves from seaport to seaport and, like with air freight, your goods will move from your supplier to the origin port and from the destination port to the final delivery point via truck.
Compared to air freight, ocean freight is slow. Depending on the route, shipping via ocean can take as long as six weeks or more. However, ocean freight is much more cost efficient than air. Additionally, there are more risks associated with ocean freight, however, cargo insurance is an affordable method of protecting against risks.
Ocean freight is divided into two categories: FCL (full container load) and LCL (less than container load). If you book a FCL shipment you will pay a flat fee for the use of one full container (check out our guideline for information on container sizes and purposes) that you can fill with as much goods as will fit. Alternatively, if you do not have enough goods to fill an entire container, you can ship LCL, which means that you are leasing the amount of space in a container your goods require. The LCL option means that your goods will share space in a container with other shippers, while with FCL your goods will be in a container of their own.
Whether in the main leg or not, trucking is generally used in every single freight shipment. However, there are a few different types of trucking. Like ocean freight, trucking can be broken down into LTL (less than truckload) and FTL (full truckload). LTL, lik LCL, refers to when your goods take up only a portion of the space on a truck, as compared to FTL, which, like FCL, refers to when a shipment takes up the entire capacity of the truck.
After trucking, the only other ground transportation for freight is via rail, where goods are moved via rail car on a freight train. While trucks can move anywhere there are suitable roads, trains are confined to tracks. However, the cheaper price and fast transit times of trains makes them a good alternative for a shipment that needs to go halfway across the country than just trucking and trucks can be used to transport goods to and from railways.
Intermodal refers to any transportation of the above modes. This is an option that allows shippers to maximize the benefits of each mode to optimize their supply chain for an economic and timely outcome. Additionally, intermodal shipments can allow a shipper to move product from a single origin to multiple destinations. The downside of intermodal is increased handling (which brings costly risks to an uninsured shipment) and varying requirements among the different modes.
Carriers
A carrier is the company that physically transports a shipment from point A to point B. This includes,, trucking companies, shipping lines, airlines, and rail companies. A carrier that provides more than one mode of transportation, for example ocean and air, are called multimodal carriers.
Forwarder
Freight forwarders are the travel agent of the international shipping world. They arrange transportation on behalf of the shipper, that is the owner or supplier of the products being shipped.
Why use a freight forwarder, couldn’t you just book space for yourself? Actually, the reason you work with a freight forwarding company is because they have built up a network of relationships with carriers and are able to procure rates and space because of those connections. Moreover, a forwarder’s experience equips them to know what carrier can move a particular shipment the best. Some larger forwarders also have their own in-house carriers and thus function as both a forwarder and a carrier.
Customs Broker
In order to import goods into the U.S., importers need to comply with any customs regulations. A customs broker is a person or company that is certified by U.S. Customs and Border Protection (CBP) and is able to help shippers move goods across the border in compliance with relevant laws.
A customs broker is specifically helpful for importing. Their responsibilities can include making sure that products are correctly classified, documents are in order, duties are properly paid, and that a shipper has any necessary import licenses. Many freight forwarders have an in-house broker or brokers that they recommend to clients.
Shippers
The most important piece to the international freight puzzle is you, the shipper. Also called the exporter, importer, or consignor, the shipper is the one looking to move freight and to do so they employ the carriers, brokers, and forwarders. While you, the shipper, will be partnering with many experts to accomplish the movement of your shipment, the shipper is ultimately responsible for their shipment, including payment, fees, and customs compliance.
Door to Door & Port to Port
This describes the terms of your agreement with your forwarder and basically indicates what portion of your cargo’s journey the forwarding company is responsible for. For example, the portion of the shipment between the export country and the import country, over sea or air, is called the main lef, if your forwarder was only responsible for that portion it would be a port to port shipment. If, however, the forwarder was responsible for moving the goods from the factory to the destination port then it would be a door to port shipment. Similarly, if the forwarder is responsible for the goods from the origin port to the final destination, it is a port to door shipment. Finally, door to door refers to a shipment where the forwarder arranges the shipment from the supplier to the final destination.
Incoterms
Like door to door and port to port, Incoterms indicate where, during the shipment, the responsibility and liability transfers from seller to buyer. Incoterms, however, are standardized freight terms and are binding when used in international sales agreements. There are eleven different incoterms, however, here are the three most common ones:
EXW (Ex Works): Shipper takes full responsibility and liability from when the shipment leaves the factory.
FCA (Free to Carrier): Shipper is responsible and liable once the shipment is passed to the carrier.
FOB (Free on Board): Shipper is responsible and liable once the shipment is on board the vessel. This term is only applicable for full container loads. It does not work for LCL or air freight, because they need to be consolidated before being handed over to the carrier.
Commercial Invoice: This document is a contract and proof of sale issued by the seller to the buyer. It describes the goods, pricepoint, value, and quantity of the goods. The commercial invoice is required for customs clearance.
Certificate of Origin (COO): Issued by the exporter, the COO is the authentication of where a product was manufactured and contains information regarding the product, its destination, and the country of export. This document is required by many treaty agreements and helps determine to what extent your goods will be subject to duties
Fumigation Certificate: This document confirms that any wooden materials used in your product’s packaging have been treated for pests. This most often applies to pallets and crates and your supplier should be responsible for arranging this. A fumigation certificate is required for customs clearance.
Power of Attorney (POA): In the freight industry, the POA allows the forwarder to deal with customs on behalf of the shipper.
Shipper’s Letter of Instruction (SLI): The official order form that a shipper gives to a forwarder detailing any instructions for how a shipment should be handled during transit.
Booking Confirmation: This is a receipt for the main leg of the shipment (air or ocean) and is provided by the carrier to the forwarder who should send it to the shipper. The booking confirmation number can then be used to track the shipment.
Bill of Lading/Air Waybill: A legally binding, transferable contract of carriage issued by the carrier, these documents outline forwarder and carrier liability and serve as a document of title and a receipt. Bills of Lading are used in ocean freight and an Air Waybill is specific to air freight.
Packing List: Only required for goods packed in large units such as a container or aircraft console, a packing list serves as the receipt of goods at delivery and is used for inspection purposes. This should be physically attached to the goods and emailed ahead to the necessary parties.
So, you now have a pretty good idea of the basics of freight, but how do you actually put it into practice. You move a shipment, of course! Check out our five steps to getting your goods on the move!
About two weeks before your shipment is ready to be picked up from the supplier you should start submitting your shipment information to a freight forwarder for a quote. You will need the following materials/information before you can request a quote:
Commercial Invoice
Shipment ready date
At Freight Right, requesting a custom quote is simple. You can email us, visit this page, or even chat with us online. However you choose to do it, we will need the following information:
Pick up address. The address where Freight Right will take over moving your shipment, whether that is your supplier or the port of origin. If you don’t have an exact address, a zip code can suffice at this stage.
Delivery address (Amazon facility ID for FBA shipments) The final delivery address where Freight Right will hand over the responsibility of your freight, this could be a port or a warehouse in the USA
Incoterms (FOB, EXW, etc). As we talked about above, these terms tell us when the supplier stops being responsible for the goods.
Value of the shipment. Especially important if you will be needing cargo insurance with us.
Description of the product (HS code if available). This can be found on the commercial invoice.
Measurements, weight, and number of boxes. Your supplier will have this information.
Advise if you have a continuous bond.
Once you have reviewed and selected a quote, proceed with booking with your freight forwarder. Once booked, they will need your shipper’s letter of instruction, so have your supplier send over the certificate of origin and fumigation certificate, if applicable.
After you book with your forwarder, most of the active work for the shipper is over. However, it is important to understand the mechanics of what your forwarder is doing so you can be prepared to provide any documentation or answer any questions they may have.
Pickup: if you are shipping EXW, your forwarder will pick up the goods from the warehouse and take them to the origin port.
Origin: covering the activities between pickup and loading onto the vessel. Here your shipment will be consolidated with other shipments (if LCL or air freight), clear customs, and taken to the air or sea port where terminal operators will load your cargo onto the plane.
Main transit: the main leg of your shipment, where your goods are flown or shipped from the origin country to the destination country.
Destination: Here the process before the main leg is repeated, but in reverse. Your goods will be unloaded, deconsolidated (if applicable) and go through customs clearance (more on that later).
Delivery: Finally, the shipment is transported from the port or third party warehouse to its final destination.
While the export process in most countries is fairly simple, clearing customs when importing into the United States can be a little daunting, especially for the first time. While most of the customs clearance process will be taken care of by your customs broker, there are a few responsibilities that a shipper must be aware of.
Provide all necessary documentation to forwarder before the shipment takes off (as outlined above)
Take out a customs bond
Report all customs information honestly
Check all documentation for consistency and accuracy
Pay customs clearance fees
While there are a number of nuances to customs clearance, this will give you a decent working knowledge as you embark on international shipping for the first time.
As you have seen, international freight can be a complicated process. However, your best tool in successfully moving freight across the sea, sky, or land is working with a knowledgeable freight forwarder!
